Asset Worksheet for Like-Kind Exchange

[RickG_123]

I have exchanged a rental property, which had Asset Worksheets (for example) for House, Renovation, Roof, and Land. The new property has Building (27.5 yrs), Site Improvements (15 yrs), and Land.

I've got the entries in Schedule E for both the relinquished and replacement properties, as well as the 8824 for the exchange. Now I'm working on the exchanged/excess basis.

Each asset worksheet (for both the relinquished and replacement properties) has the section "MACRS Property Involved in a Like-kind Exchange", which I believe should be filled-out to get the exchanged/excess basis sorted by the program.

What is to be used for the Asset ID? Form says "Enter same ID on all related assets", and help says "use the same ID on all assets involved in the transaction" - Meaning all the assets from the relinquished property? Or all the depreciable assets from the relinquished property of the same class? Or use the same ID on the corresponding assets between the relinquished and replacement properties? Or??? (I wish they provided an example in the help...!)

Is there a worksheet that shows what TT is doing with all these entries mapping assets/depreciation between the two?

Finally, my case is actually splitting the exchange from the one relinquished property into two replacement properties - accordingly I have two 8824's, each exchanging 50% of the relinquished property. What is the best way to split the depreciation entries and/or use the Asset IDs correctly in this case?

[RobertB4444]

Asset IDs bundle your assets for sale.  So any associated assets (improvements to a rental property and the rental property itself) would use the same ID in order to link them.

You should cut all of the depreciation on the relinquished assets in two and apply the 50% to each of the new properties.

[RickG_123]

You said "any associated assets (improvements to a rental property and the rental property itself) would use the same ID in order to link them" - So my example of House, Renovation, and New Roof would all be bundled using the same ID?  Even if they're different classes (e.g., 27.5 vs. 15 years)?

You said, "cut all of the depreciation on the relinquished assets in two" - So the same asset ID would then be used twice in the acquired properties, but with half the value?  Or would you have to create two asset IDs with half the value each?

(It would be great if there was a worked-through example showing this process!)

Thank you very much for any help and clarification you can provide on using Turbo Tax successfully for a 1031 like-kind exchange!

[DianeW777]

Question: So my example of House, Renovation, and New Roof would all be bundled using the same ID?  Even if they're different classes (e.g., 27.5 vs. 15 years)?

• See the information below for how to proceed with the change in property and maintaining the same assets for the new property.

Question: Or would you have to create two asset IDs with half the value each? Yes

• You would take each of the old assets, split it in half for each recovery period and enter it as though nothing changed.  The same cost basis, the same original date placed in service, etc.  This will keep the new assets with the same character, depreciation and cost basis as the original assets which is how it works.

You depreciate property you received in a like kind exchange (Section 1031), as though you never gave up the original property.  You use the same adjusted basis as the property given up. If you paid money in addition to the property given up then you would depreciate the additional cost over the same recovery period as a new asset, placed in service in the current year.

• Where do you enter a like-kind  or Section 1031 exchange?
• IRS Fact Sheet for Section 1031 Exchange
• IRS Instructions for Form 8824